BEAUMONT, Texas - Two East Texas women have been sentenced to federal prison for income tax violations in the Eastern District of Texas, announced U.S. Attorney John M. Bales today.
Elizabeth G. Baliey, 57, and Patricia W. Sheard, 61, both of Spurger, Texas, pleaded guilty in March 2012 to being involved in a conspiracy to defraud the United States and were each sentenced to 30 months in federal prison today by U.S. District Judge Marcia Crone. The defendants were also ordered to jointly pay restitution in the amount of $437,994.00.
According to information presented in court, Bailey founded Gayle's Taxes in 1999 in Spurger, Texas and employed Sheard as a bookkeeper. An investigation by the Beaumont office of the Criminal Investigations Division, Internal Revenue Service revealed that the defendant Gayle Bailey and co-defendant Patricia Sheard operated a tax preparation service in Jasper County known as Gayle's Taxes wherein the defendants prepared numerous personal income tax returns for clients deliberately overstating numerous expenses and deductions causing the taxpayers to receive a larger refund or pay less tax than actually owed. The clients were given a copy of an electronic return as it should have been filed whereas the defendant actually filed a false return with inflated deductions and expenses and diverted the inflated portion of the refunds into bank accounts controlled by defendant Bailey and co-defendant Sheard. According to a factual basis presented in open court additional audits by the IRS relating to clients of the defendant Bailey's tax preparation business for tax year 2006 - 2008 revealed the defendants had caused the filing of over 100 false personal income tax returns and diverted the fraudulent refund portion to the defendants' bank accounts causing a loss of over $465,000. A federal grand jury returned an indictment on Nov. 16, 2011, charging the defendants with federal income tax related charges.
Bailey was ordered to report to the U.S. Marshals Service on Sep. 5, 2012, to be transported to federal prison. Sheard was already detained.
This case was investigated by IRS Criminal Investigation and prosecuted by Assistant U.S. Attorney Robert L. Rawls.
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